ISLAMABAD: The government is facing difficulties in broadening the country’s tax base as only 131,811 people filed their income tax returns until Oct 5 in the tax year 2015, according to a tax official.

Until Sept 30 last, which was the last date for filing of tax returns, only 110,721 people filed their returns. As a result of this poor compliance, the government extended the last date for filing of returns until Oct 31.

Pakistan’s tax system has failed to convince three million people, who are on the tax roll, to file returns. It highlights tax-payers’ lack of trust in government and mismanagement in the tax machinery.

Last year, 940,000 people had filed their returns with the FBR. This figure was achieved after giving several extensions. Until Dec 5, 2014, the FBR had received only 750,000 income tax returns, the official said.

The officials are still hopeful that number of tax filers would multiply, though last date might have to be extended until Nov 30 or beyond to facilitate and encourage people to file tax returns.

People are reportedly facing problems in filing of tax returns because the designed IRIS system (software) of the FBR is not user-friendly.

The minimum penalty for not filing returns/statements/wealth statements starts from Rs5,000 and it can be as high as 25 per cent of the tax payable in a year. The non-filer would have to either declare his total income for assessment of tax in a year or the tax official would declare it ex parte.

In the budget 2015-16, the government took two measures for broadening the tax base from July 1, 2015. The tax rates of withholding taxes were increased for non-filers of income tax returns and 0.3pc withholding tax was introduced on banking transactions of non-filers.

As a result of these measures, the tax official claimed the FBR has, so far, received 40,000 new returns. These tax-payers wanted to avoid paying higher withholding tax rates or the new tax on banking transactions.

The official claimed that these two measures are expected to yield results. In Pakistan, 0.3pc of the total population pays taxes against 4.7pc in India, 58pc in France and 80pc in Canada.

This is despite the fact that the government has doubled salaries of tax officials to curb corruption and improve efficiency.

Pakistan continues to have the lowest number of active taxpayers per tax administrator in South Asia, which is 64.

The date of filing of returns of total income/statements of final taxation of companies whose tax year ends between July 1, 2014 and Dec 31, 2014, due on or before Sept 30, 2015 has also been extended till Oct 31, 2015.

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